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Reducing Your New Hire Turnover

Understand the Link Between Poor Performance and Higher Attrition

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Introduction
Many high-performing organizations have established key objectives for their frontline employee hiring processes. With the growth of big data, application of technology, and closed-loop analytical models, the tools and methods are in place to consistently achieve these objectives. In many cases, these objectives can be summarized in three categories: 1. Contribute towards improving Quality of Hire. Quality of hire is defined as selecting an employee who has a greater probability of meeting or exceeding the organizations production goals. For contact centers, examples include: a. Call control measured via Average Handle Time (AHT) b. Customer experience measured via issue resolution or customer satisfaction (CSAT) c. Sales measured via revenue per call d. Retention measured via save rate 2. Reduce attrition and maintain retention improvements 3. Create a financially advantageous partnership between recruiting/human resources and business units a. Meet recruiting needs to avoid lost opportunities with open production positions b. Drive towards a lower cost per hire while improving quality of hire c. Focus on improving the ROI to the business year over year In this discussion, we will focus on the intersection of quality of hire and attrition. Attrition is a major operating cost for hourly employers. For example, in the contact center industry, FurstPersons research shows that the average per agent cost of attrition is $4,285. A major focus of human resource, recruiting, and operational leaders is to reduce attrition costs. Often, the link between employee performance and attrition is overlooked. However, poor employee performance is a significant contributor to high attrition. In this discussion, we will provide two examples illustrating the link between poor employee performance and high attrition. We will then suggest some strategies and tactics to improve your ability to select candidates that will be high performing employees with longer retention.

Performance and Attrition What is the story?

Typically when attrition is analyzed, a significant focus is placed on behavioral based turnover that results in voluntary attrition. For example, the classic no call, no show or job abandonment are common reason codes on turnover reports. Based on our research and experience, poor performance is often a significant contributor to attrition both voluntary and involuntary. In some cases, poor performers, expecting to be disciplined for their poor performance, abandon their jobs. In other cases, poor performers are released from their jobs due to their performance. Hiring organizations have an opportunity to focus on selecting candidates who have a better probability of higher performance on the job. The result will be overall lower attrition.


Before creating a hiring model, hiring organizations should consider investing time to understand the relationship between performance and attrition in order to embed those findings in the hiring model. The analysis below provides a framework for influencing future selection models because we can identify the relationship between performance and attrition. Going forward, the goal is to create a hiring and selection model that eliminates potential poor performers from consideration, which will impact the business in two critical ways: (1) by enhancing the overall performance of retained employees and (2) by reducing the attrition that can be attributed to poor performance. Two case examples will help illustrate this point. Example 1 - Technical Support Job Family In this first example, we consider an inbound technical support role. Over 1,000 agents are in the sample. The two metrics for review are Average Handle Time (AHT) and Sales performance. AHT represents a common call control metric used by many contact center leaders to evaluate production capabilities. Sales revenue represents the growing use of contact centers as a revenue driver for the business. In graph 1 below, we examine Average Handle Time (AHT) and Attrition. We see several trends which need to be addressed in the hiring process. The bottom line poor performers have higher attrition. Poor performers (AHT > 850 seconds) have a 71% higher term rate at 90 days Average AHT for those who leave = 909 seconds Average AHT for those who stay = 841 seconds

Graph 1 Inbound Technical Support: AHT compared to Attrition


In graph 2, we compare Sales Revenue and Attrition and see a repeat of the AHT issue. Poor performers in sales revenue have higher attrition rates. Poor performers (Sales revenue < $100) have a 233% higher term rate at 90 days Average Sales Revenue for those who leave = $87 Average Sales Revenue for those who stay = $143

Graph 2 Inbound Technical Support: Sales Revenue compared to Attrition

Key Findings Technical Support Employees with AHT greater than 850 seconds and average sales revenue less than $100 are 277% more likely to term in their first 90 days. This analysis demonstrates an opportunity to create a financial gain by: o Identifying job candidates who can manage their calls better (AHT) while generating more sales revenue. o Understanding the behavioral aspects that underlie both attrition and performance to create a greater opportunity to reduce early stage turnover.


Example 2 Customer Care Job Family In the second example, we consider an inbound customer care role. Over 1,500 agents are in the sample. As with the Technical Support job family, the two metrics for review are Average Handle Time and Sales Revenue. In graph 3, we compare Average Handle Time (AHT) and attrition. Again, we see several trends which need to be addressed in the hiring process. Poor performers (AHT > 600 seconds) have a 108% higher term rate at 90 days Average AHT for those who leave = 656 seconds Average AHT for those who stay = 591 seconds

Graph 3 Inbound Customer Care: AHT compared to Attrition


In graph 4, we compare sales performance and attrition. Again the same trend - poor performers are more like to leave. Poor performers (average sales revenue < $350) have a 245% higher term rate at 90 days Average sales revenue for those who leave = $234 Average sales revenue for those who stay = $450

Graph 4 Inbound Customer Care: Sales Revenue compared to Attrition

Key Findings Customer Care Employees with AHT greater than 600 seconds and average sales revenue less than $350 are 100% more likely to term in their first 90 days. This analysis shows a similar financial gain opportunity as the inbound technical support.

What can you do to reduce attrition?

The above reviews of performance and attrition highlight a key opportunity: to develop a hiring model that focuses not only on direct attrition improvements, but also on improvements to employee performance that will subsequently have an impact on attrition as well. To get started, we suggest several action steps that will position you and your hiring team for success. 1. Build the right foundation by understanding the job and details associated with the job. A job analysis process will help you define the jobs in terms of competencies which can be measured during the hiring process. We commonly use a four quadrant model to group competencies:

When the job analysis is complete, you will have a list of important competencies related to successful job performance:

The job analysis helps us understand that the selection process (i.e. assessment tools) should measure:

Problem-solving/learning ability Communication related skills (including written communication) Computer skills Customer service orientation and skills Personal characteristics related to conscientiousness, composure, and interpersonal style

2. Spend time understanding your relationship between performance and attrition much like the two examples discussed earlier. 3. Start small focus on one metric and its relationship to attrition. By isolating one metric, you can control other factors that may create noise in your execution. You can then examine how you hire new employees into this role. If possible, you should determine what the relationship is between your existing process and production performance for the selected metric. For example, if you use an interview, do better scores on the interview translate to better production performance? If not, you will need to rethink how you evaluate job candidates during the hiring process. Without being able to predict new hire performance, your hiring organization will be ineffective at reducing attrition and identifying candidates that will perform better.

4. Understand how to measure potential job performance by using the right selection tools. The chart below provides some examples:

What type of results can you expect?

Earlier we highlighted two examples from an organization. In both the inbound care and inbound technical support call types, new employees who struggled with AHT and Sales Revenue performance also had higher 90 day attrition. The organization used the information from their study of performance and attrition, as well as job analysis details to implement a different approach to hiring. The organization focused on a two primary areas to change its hiring model: 1. Revised the selection process to move beyond just interviews and skills testing, like typing, to include other assessments that measure abilities and behavioral characteristics for a better job fit. 2. Shifted recruiting efforts away from traditional sources like job fairs to more employee referrals and internet tactics.

The net results included significant financial gain:

Applying these results to any organization will yield impressive financial gains all associated with focusing on hiring improvement. In summary, high new hire attrition can be associated with poor performance. Spending time to research the link between poor performance and attrition may present opportunities to reduce overall turnover. Following some basic steps and using the right assessment tools can create significant financial gain.

About FurstPerson
FurstPerson provides talent assessment solutions for customer contact organizations. We enable companies to hire superior talent for service, sales, and support roles. These roles may be in-person, over the phone, or via chat/email. Our talent assessment solutions are customized by client, designed by our expert selection consulting team, and delivered via our web-based talent assessment platform. Each solution is designed to improve business performance. FurstPerson has provided contact center hiring solutions since 1997. Our solutions are active in over 1,500 locations across North America, Europe, Latin America, and Asia. Our industry leading solutions cover both brick and mortar and home agent needs. Our innovative technology includes call center simulations as well as other industry leading assessment tools. Our contact center clients have realized results that have improved new hire retention, job performance, workflow efficiency, and overall profitability. FurstPerson clients typically realize up to a 70% reduction in 0 to 90 day attrition and up to a 45% improvement in performance. Learn more about FurstPerson:

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